Andy Cohen and Thomas Dickey see the same reports about the
economic recovery, and both share an owner's perspective. But
they have reached radically different conclusions about what it
means for their businesses.

Cohen's company, Ticketcity.com, is spending $1 million to
develop and deploy new software that will "defragment"
the secondary market for sports and entertainment tickets online,
where he competes furiously with three other companies.
"I'm an eternal optimist," says the 37-year-old
president and CEO of the Austin, Texas-based company, which raked
in $11 million in sales in 2001. "But I believe if you give
100 percent, work hard and give good service, good things are going
to happen."

For entrepreneurs,
economic recovery can be as daunting as a recession.

Dickey acted more conservatively. Although he foresees a
recovery for his Canton, Ohio-based company, Heinemann Saw Co.,
which reconditions saw blades for steel companies, Dickey, 65, just
can't bring himself to make a purchase of $250,000 for
computer-controlled, productivity-boosting grinding equipment.
"I don't think any small-business owner would be inclined
to do so, given the conditions," he says. Though his company
projects sales of over $3 million for 2002, "We'll
continue to have a cautious outlook for some time," Dickey
says.

It's not exactly A Tale of Two Cities, but Cohen and
Dickey's contrasting approaches underscore the fact that, for
entrepreneurs, economic recovery can be as daunting as a recession.
Torn between optimism about improving conditions and painful
memories of the downturn that now appears to have ended,
independent business owners are at a point of reckoning. Do you go
on with making significant investments in your company? Or do you
continue to hold back with uncertainty about the strength of the
recovery and, perhaps, by other factors specific to your
markets?

"I'm reading in the papers that the recession is over,
the sun is coming out, music is playing in the background and
everyone's happy again," says J.P. Frenza, a
small-business specialist for IBM Corp. "But most owners say
it's still very tight, whether they serve business-to-business
customers or consumers. They're conservative with their
spending, and everyone is in a hold-the-line mode."

Analyzing the Recovery

Though the circumstances of every business differ during this
iffy time, there are plenty of common dynamics you can take into
account as you make decisions about whether, where and to what
extent to invest in your company during the coming months. Consider
these factors:

* The small-business cycle:
Everyone is eager to say the economy has turned the corner. Yet,
even if recovery seems to have taken hold, it still may not be
reflected in your company's numbers. That may be because the
small-business arena is one of the last sectors to participate in
an economic uptick, trailing large and middle market companies by
six to eight months, says Mike Price, senior vice president of
small-business banking for National City Corp. in Cleveland. He
sees a small-business recovery in the second half of 2002.

Michael Butler, vice chairman of Key Corp., another
Cleveland-based bank, adds "Small business might be in for a
longer downturn and a slower recovery, or an even longer [period
of] flattening out."

* Wisdom in numbers: The
more sober outlook, bankers say, is reflected in the persistent
caution exhibited by many entrepreneurs well into 2002. The
majority of business owners continued to hold back from major new
outlays in the second quarter. They're heeding the advice of
people like Butler. "The last thing we want owners to do is
gear up their business too far ahead before orders start to flow
in, especially with capital expenditures," says Butler.

Of USBX Advisory Services LLC's three dozen entrepreneurial
clients, "only three or four are making investments in their
businesses," says Brooks Dexter, senior managing director of
the Santa Monica, California-based investment bank. "The
[others] are taking a cautious approach."

That's why Janet Dagle, owner of Basket Gourmet, which sells
specialty foods, gourmet coffee and gift baskets, isn't
spending the thousands she would like to invest in new displays and
fixtures for her store in Selinsgrove, Pennsylvania.
"There's nothing wrong with what I have, so why should I
spend money now?" says the 45-year-old entrepreneur, whose
company boasted 2001 sales of more than $100,000.

Similarly, David Gonzalez would like to buy some laser-equipped
marking tools for his Toledo, Ohio-based company, but he
doesn't trust his order flow enough yet to do so.
"Customers are still only buying what they need, and
they're buying in very small quantities," says the
43-year-old president and owner of Tooling & Components Corp.,
whose sales are about $1 million a year.

Rewards of the Recovery

* The rewards of confidence:
If you have the confidence to back your ambitions up with action
and financial exposure, the early stages of recovery can be an
excellent time to be proactive. "Good ideas are impervious to
the business cycle," says David Horn, a partner with Tatum CFO
Partners LLP, a national group of interim CFOs. "In a period
like this, people look at their business models to figure out how
to make money. It can be a fertile period."

But before you place your company on the bleeding edge, he
suggests you be fairly sure your investments in your business will
eventually pay off. To make that determination, ask yourself the
following, says Dexter: "What indicators can tell you how your
business is doing? Do you have benchmarks that have been tested
during past economic cycles? What drives your business? Are you
able to move fast? There's always an opportunity to be cautious
in the near term and aggressive in the intermediate term if you
feel comfortable around your indicators. There's an inflection
point."

Some owners have overcome a lot to get past such points. Gerry
Elwood's company, The Maids Home Services in Red Bank, New
Jersey, had sales of $635,000 in 2001. But when Elwood lost
customers in the September 11 attack, business slowed substantially
last fall amid the marketplace shock. Since then, however, she has
bought two more franchise territories and has invested in
carpet-cleaning equipment so she could diversify her company's
service offerings. "A bad economy can be a great
opportunity," says Elwood, 49. "When a lot of people hid
and tried to wait it out, I went the opposite way."

* The appeal of cheap
acquisitions: Consolidation is a popular activity at
this point in the economic cycle because the differences between
the haves and have-nots in many marketplaces are exacerbated, and
pickups can be inexpensive. "You can do a lot of good
bargain-hunting now," says Don Williams, a San Diego expert on
emerging growth markets for Ernst & Young.

PUT YOUR MONEY ON(THE)LINE

EXPANDING YOUR BUSINESS IN CYBERSPACE PAYS OFF AFTER
ALL

If investing in your company's online
presence is low on your priority list at the moment, you're not
alone. Between the dotcom flameout and operating during a
recession, most entrepreneurs haven't been eager to take a
flyer on the Internet. But now may be the right time to reconsider.
Not only has the shakedown of the Internet made it clearer which
approaches actually help small companies online, but the
beleaguered high-tech sector has also begun catering more to the
needs of entrepreneurs, whose businesses--while at one time perhaps
perceived as too small--now can make a difference to
them.

Technology vendors including Microsoft and
Oracle are aggressively pushing e-business services with small
companies more than ever. And prices are falling for e-commerce and
Web content-management applications that are essential for online
businesses, says Gartner Inc.

"The glut of e-commerce vendors at
the large-enterprise level is driving them to refocus their
attention on [small and midsized businesses]," says Jim
Browning, research director for Gartner. What's more, he adds,
customers and suppliers will expect small companies to integrate
the Internet into their business operations.

Good People, Hard Assets and Avoiding Debt

Triangle Printers Inc. is in such an opportunistic mode. While
small printers in metro Chicago got in trouble during the recent
recession after investing wildly in expensive digital equipment
without being able to pay up, Skokie, Illinois-based Triangle was
more conservative. "Every week, another printer is going out
of business," says Harvey Saltzman, president and owner.
"So we've acquired three companies in the last few years
and are looking for more."

* The availability of good
people: Gone is the legendary labor market tightness of
the late '90s, replaced by a traditional balance between supply
and demand. That means people with the experience, skills and
talents you're looking for may finally be available. But
upgrading doesn't necessarily mean expanding staff. "Most
entrepreneurs would rather see the business first and worry about
adding staff once they see more orders," says Dexter of
USBX.

"You don't
want to over-leverage your company if the economy doesn't
recover at the pace you expected."

As a surviving Internet company, YellowPages.com has its pick of
many experienced but unemployed dotcommers floating around the job
market. "We've found high-quality people at prices that
are shareholder-friendly," notes Dane Madsen, 44, president
and CEO of the Las Vegas-based online phone directory.
"We're not bringing in new people indiscriminately, but
filling slots."

* The quandary of hard
assets: With interest rates at a an all-time low,
construction capital is cheap. But owners aren't eager to
expand their factories or offices just yet. Similarly, prices of
capital goods and other business properties are soft in the early
stages of recovery. "Everything is favorably priced right
now," notes Horn of Tatum CFO.

But for many entrepreneurs, that isn't enough to justify
making big purchases. Dickey at Heinemann Saw says the attractive
pricing of the equipment he'd like to buy is enhanced by his
intention to purchase from a European manufacturer. That way, the
dollar would work to Heinemann's advantage. "But
that's still not enough to adjust the decision at this
point," he says.

* The burden of adding debt:
The last thing you want is more long-term debt. Solicit short-term
financial help from friends and family or other sources, but avoid
more bank debt even if you can obtain it. "You don't want
to over-leverage your company if the economy doesn't recover at
the pace you expected," says Key's Butler.

* The art of the possible:
You can advance your company by focusing on what you can accomplish
against today's economic backdrop rather than on the major
outlays you're not ready to make. A good place to start is
making sure your customers remain happy.

Entology Inc. grew robustly even through the recession, but
Lawrence Prager isn't taking anything for granted.
"You've got to lock down your customers so they don't
have an excuse to go somewhere else," says the 38-year-old
founder and CEO of the Bedminster, New Jersey-based IT consulting
firm, whose projected sales for 2002 are about $19 million.
That's why Entology added electronic invoicing as an added
convenience for its customers. "If we can keep costs low and
operate more efficiently than other people," says Prager,
"we're going to invest there, because if the economy
continues to be uncertain, we'll take advantage of our
strength."

NO
FEAR

BIG MOVES EQUAL BIG
GAINS

Irving Sparage wasn't going to let a
little thing like a recession interfere with taking advantage of
the business opportunity of a lifetime. That's why, even after
a down 2001 and a sluggish spring, he's completing an
investment of about $1 million to move the headquarters of his
company, Smith Welding Supply Inc., from downtown Detroit to
suburban Ferndale, Michigan.

"I'm making this investment for
the long term," says the 53-year-old third-generation owner of
a family business. "This move will make us a more efficient
company and better poised to handle growth."

Not only was the urban site getting too
tight for Sparage's rapidly expanding business, which now
employs 65 people, but Ferndale city officials also indicated they
would be fine with Smith Welding's storage of industrial gases
at the new location, which was the site of an old gas company.
"It was a godsend," he says. "It's hard to find
communities that aren't reticent about our moving
in."

Sparage purchased the property two years
ago when Smith Welding's growing staff was already in the
double digits, and the company was well on its way to a $14 million
year. But when the industrial recession hit hard times last year,
Smith Welding fell several hundred thousand dollars short of its
2000 revenues. The softness continued through last
spring.

But Sparage kept right on with the move,
including investing in "higher-tech equipment in this facility
to try to get an edge on the competition." Now he wants to
boost Smith Welding's sales staff by 10 new people in the next
two years. "I guess," he concludes, "I'm an
eternal optimist."

Dale Buss is a journalist and editorial consultant in
Rochester Hills, Michigan.